Maybe you could sum up Ultralife's business model as PC, as in
power and communications, that is. The company's main business is
the design and manufacture of rechargeable and
non-rechargeable batteries. Accounting for about a quarter of
sales, its Communications Systems Division provides such products
as amplified speakers and cable assemblies. Ultralife sells its
products around the world to OEMs, distributors, and retailers. The
company also sells directly to the US and foreign defense
departments. Military sales (both directly and
indirectly) account for about 50% of Ultralife's revenues.
Ultralife has operations in North America, Europe, and Asia
(China and India). The company has offices, warehouses, and
manufacturing locations in China, India, and the UK. Domestic
offices reside in Florida, California, Virginia, Maryland, Georgia,
and Texas. The US accounts for nearly 60% of total sales.
The Battery and Energy Products segment, nearly 70% of sales,
makes lithium-manganese dioxide non-rechargeable batteries (to be
discarded when discharged), including 9-volt, HIRate cylindrical,
and Thin Cell, for such applications as smoke alarms, intensive
care devices, radios, automotive telematics, night-vision devices,
and thermal imaging equipment. The segment also makes
lithium ion rechargeable batteries and charging systems for
communications, medical, and portable electronic applications.
Supporting military communications, Communication Systems
products are marketed under the McDowell Research and AMTI brands.
To serve the demanding needs of both the US and approved foreign
militaries, the Communication Systems' products are made to
withstand severe environments.
Sales and Marketing
Ultralife targets government, defense, and commercial customers
across the globe. It sells its products worldwide through a variety
of trade channels, including original equipment manufacturers
(OEMs), industrial and defense supply distributors, and directly to
US and international defense departments. The company also
distributes some of its products through domestic and international
distributors and retailers. Its sales are generated primarily from
customer purchase orders.
Ultralife's balance sheet has been moving in the wrong
direction, with revenues falling sharply the last three years.
Revenues dipped 22% from $102 million in 2012 to $79 million in
2013. Mainly due to high operating and research expenses, the
company has suffered five straight years of net losses, although
the losses have been shrinking.
The declines for 2013 were due to lower government and defense
sales resulting from budget and sequestration reductions. Battery
and Energy Products declined due to the continued slowdown within
the US government and defense order rate for rechargeable and
non-rechargeable batteries and charger systems. Ultralife was also
affected by lower sales of 9-volt batteries, while its
Communications Systems revenues decreased due to the government
furloughs and shutdown.
The company saw a huge drop in operating cash flow in 2012
followed by growth in 2013. The operating cash flow increased by $2
million in 2013 due to a decline in net loss and an increase in
cash generated by accounts receivable.
Battery & Energy Products' strategy includes alliances with
the OEMs and government entities who buy its products. The
segment's sales and technical staff seek out feedback from such
customers for product development. More generally the company touts
such advantages of its lithium batteries as lighter weight and a
longer shelf life.
In an operational initiative, the segment has been transferring
a large part of its 9-volt battery making operations from its New
York plant to a facility in Shenzhen, China. The Communication
Systems segment's former RedBlack Communications unit,
which marketed mobile, modular, and fixed-site communication
and electronics systems, was sold off in 2013 after struggling with